Pakistan's textile industry losing ground amid economic turmoil

By Al Mayadeen English
Source: Agencies
6 Aug 2023 10:53

Just like many other countries across the world, Pakistan's industrial manufacturing sector has suffered some serious setbacks.

In this picture taken on July 20, 2023, workers shift a fabric roll at the Kohinoor Textile Mills in Lahore (Photo by Farooq NAEEM / AFP)

A report by AFP on Sunday details how the textile industry in Pakistan is losing pace amid a highly competitive global market.

Just like many other countries across the world, Pakistan's industrial manufacturing sector has suffered some serious setbacks.

Not only this is owed to disruptions in global supply chains that followed the COVID pandemic, but also to the high energy costs that were triggered by the conflict in Ukraine.

As Pakistan's textile industry accounts for 60 percent of the country's exports, the prospects for further decline are mounting fears in an industrial workforce that employs 40 percent of the country's 20 million industrial employees.

When the pandemic came to an end, textile industries from the region's biggest competitors -- including Pakistan, India, and Bangladesh -- were granted state subsidies and affordable energy prices in order to momentum.

However, in 2022-2023, exports in Pakistan fell by 15 percent to $16.5 billion, AFP states.

"Two years ago, we were on a very high growth trajectory... we were confident that our exports this year would go to $25 billion," said Hamid Zaman, managing director of Sarena Textile Industries.

"Unfortunately, when you have political instability and things are not clear, and the policies of the government are reversed, this whole thing has gone into a tailspin," he told AFP.

"Perhaps 25 to 30 percent of all textile factories have closed. It is estimated that perhaps 700,000 jobs have been lost in the last year or year and a half," Zaman added, noting that several factories have either closed temporarily or are no longer receiving orders.

Pakistan suffered a disastrous flood in the summer of 2022 which caused cotton crops to fall to their lowest.

While industrial players attempted to compensate by purchasing cotton from abroad, they were not able to do so because of capital control measures imposed by the government to preserve their forex reserves.

Another major factor is the country's political instability which has been ongoing for years. However, things escalated in April 2022 when Imran Khan was dismissed as the country's Prime Minister by a vote of no-confidence.

His efforts to launch another election to defy the military-influenced government resulted in his arrest in May and caused authorities to launch a massive crackdown spree on his party and its supporters.

A court in Islamabad on Saturday sentenced the former prime minister to three years in jail, alongside disqualifying him from politics for “corrupt practices.”

Khan was escorted by police from his home in Lahore on Saturday, after a ruling in the Toshakaha case came out, in which he was accused of illegally selling gifts worth hundreds of millions of rupees, that were originally intended for the state.

The judge said the former PM “deliberately submitted fake details” of the gifts to the court, and after expressing his frustration that his lawyers were not present in court, sentenced Khan to three years and has been banned from politics for five years.

Khan has insisted he did not buy or sell state gifts in violation of the law. In Pakistan, government leaders are allowed to buy back gifts, but they aren't usually sold. If they are, individuals must declare that as income.